Bank of England cuts rates to lowest in history and increases bond buying
The BoE also said it would make an extra £200bn in bond purchases, effectively printing new money to push into the financial system
The Bank of England (BoE) has cut interest rates to a low of 0.1 per cent, the lowest in the central bank’s 325-year history as Britain’s economy lies in danger due to the ongoing coronavirus pandemic.
Its rate-setting committee, led by new governor Andrew Bailey, also decided at an unscheduled meeting to re-start the post-crisis asset purchase programme, also known as quantitative easing.
The BoE said it would make an extra £200bn in bond purchases, effectively printing new money to push into the financial system, to support activity.
The 10-year gilt yield, which rose to just below 1 per cent earlier, fell to 0.76 per cent.
The monetary policy committee (MPC) had cut the bank rate to 0.25 per cent from 0.75 per cent only a week ago.
It said the unanimous decision was part of moves "to meet the needs of UK businesses and households in dealing with the associated economic disruption".
The MPC is due to meet again on Wednesday, March 25, as governments and central banks globally come to terms with the deterioration in business activity.
At the same time, South Africa’s central bank also slashed its benchmark interest rate by the most in a decade. The South African Reserve Bank said that it had cut its repurchase rate by a percentage point to 5.25 per cent, the lowest level since 2014.
Covid-19 cases in South Africa have risen to 150, while in the UK the number of cases detected so far are 2,626 with 104 deaths and an actual estimation of Covid-19 cases between 35,000 and 50,000.
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